Cutting Edge Environmental and Social Risk Management for Largest Foreign Direct Investment in Peru

Peru LNG is the largest foreign direct investment in Peru’s history and is expected to turn the country into a net hydrocarbon exporter when operations begin in 2010. It will support economic growth in some of Peru’s poorest regions, both through its contribution to government revenues and its community-development programs.

Peru LNG approached IFC looking for a financial partner with the experience to provide advice on the environmental and social management of the $4 billion liquefied natural gas project that includes a liquefaction plant and a marine loading terminal on Peru’s central coast, as well as a new 408-kilometer pipeline that will connect to an existing pipeline network east of the Andes.


  • Financing—IFC contributed a $300 million loan with a 17-year maturity to the project’s $2.05 billion loan package. The financing plan called for maturities well beyond  those available solely from the commercial bank or bond markets. It also met the project sponsors’ tight deadline with nearly unchanged terms, despite a precipitous market drop that wiped out one-third of the Dow Jones Industrial Average.
  • Environmental and Social Leadership—IFC dedicated four senior staff to help manage the social, environmental, and reputational risks associated with a project of Peru LNG’s size.  Based in Peru and Washington, D.C., the team provided advice on land acquisition and compensation issues affecting Andean communities and local fishermen as well as on Peru LNG’s environmental and social management plans.
  • Community Development—Modern risk management in extractive industries includes ensuring that project benefits accrue to local communities. IFC and Peru LNG are jointly implementing programs to enhance economic development near the plant and pipeline:
    • Business Linkages Program, which will help stimulate the local economy by giving small and medium enterprises opportunities to provide goods and services to Peru LNG.
    • Municipal Royalty Investment Program, a pilot program that will help increase the ability of two of Peru’s poorest municipalities to manage, plan, and allocate revenues they receive, leading to a more efficient investment of royalties. 
    • Community Participatory Monitoring, which will give local people and organizations an opportunity to evaluate the company’s environmental and social performance.

“We very much value IFC’s support in helping us develop a project that follows best practice environmental and social standards and that extends the investment’s development benefits to the Peruvian people.”
—Steve Suellentrop, President of Peru LNG